Wage Insurance/Supplement Demonstration Project

The purpose of this project is to conduct background research and to design a demonstration and rigorous evaluation that tests the provision of wage supplements or wage insurance to unemployed individuals. As part of this project, researchers at The Ray Marshall Center will review existing data and research on the topic, identify different options for further research and/or demonstration(s) testing various strategies, and analyze the feasibility of these options. Many dislocated workers experience significant earnings losses when they become reemployed in a new occupation or industry. To mitigate these losses, economists have proposed wage supplements, also called “wage insurance.” As proposed, wage supplements “provide temporary, partial wage supplementation to dislocated workers who lose their jobs due to either a domestic or an international dislocation” (Wandner, 2010, p.448). Wage supplements are proposed to be a complement to unemployment insurance (UI). The UI program protects workers from wage loss while they are unemployed, while wage supplements are designed to protect workers from wage loss after they are reemployed. Wage supplements may encourage dislocated workers to more rapidly accept reemployment since “[u]nder most proposals, affected workers usually receive up to half of their lost wages based on their pre dislocation wage, usually for a period of up to two years” (Ibid.).